The Stimulus: Jump Starting a Car with No Engine

Left-wing ideologues like Paul Krugman posing as economists believe that the reason why the Obama stimulus dumped upon us didn't work is because it wasn't big enough. Krugman points to statistics that show a clear relationship between stimulus spending and corollary increases in economic activity in Europe and the U.S. His statistics also show decreases in economic activity when spending stops. He stops there, arrogantly believing that he pointed out an obvious truth that all should understand and approve of, and the U.S. government should, therefore, "invest" huge sums of borrowed money into the economy. (This is not atypical short-sightedness for Krugman. Remember his piece bloviating about how Wisconsin's unionized teachers were superior to Texas' non-union teachers? Iowahawk destroyed Krugman's case with a little bit of research and basic logic. For those of you who are not familiar with this fun piece of journalism, read it here.)

Of course, Krugman fails to analyze his data properly. Even a slightly intelligent reading of those statistics reveals a distinctly opposite conclusion. Sure, economic activity increases when governments spend money. How could it not increase? A bunch of people have money in their jeans to spend. More importantly, however, are his statistics showing that activity slows when governments stop spending. Of course it does. Interpreting this, however, is where he gets it wrong.

Economists like Krugman believe that government spending in times of a down economy will "jump start" the economy and create enough economic activity to hold us in good stead until the economy recovers on its own. Additionally, they believe that the economy will improve more quickly because of the injection of money by the government, known in current terms as a stimulus.

As mentioned, a key aspect of their statistics is that economic activity decreases when the spending stops -- proof, they claim, that stimulus spending works. They say that because the amount spent wasn't enough, a considerably larger stimulus was necessary to do the job. The "small" amount provided was merely a temporary Band-Aid.

Well, it appears to me that a larger amount would have been just a bigger Band-Aid.

In order for a "jump-start" to work for a car, the other systems of the car have to be working properly. The engine has to run, and the alternator has to recharge the battery, or the car will simply not start the next time you turn the key. Isn't this is a mirror-image of the stimulus? Without a well-functioning economy with good underpinnings, a jump-start will accomplish nothing -- except delay the inevitable, and leave us in a bigger hole. A bigger stimulus would have kept the headlights and radio on longer, but with no engine, the lights go out when the jumping battery is out of juice.

These economists sometimes refer to themselves as Keynesians, which, from what little I know of Mr. Keynes, doesn't do him justice. True, Keynes believed in government spending when the economy is slow, but only when paired with saving and paying down debt when the economy is moving along well. From what I have read, it appears that Mr. Keynes would have shuddered at the magnitude of the current U.S. debt, and he would not have looked favorably on spending at this time. But regardless of what Mr. Keynes would have thought, these times are different from Keynes's world of the 1930s, when our economic machine was blessed with a young, hungry work force that expected nothing from government and gave everything in return. Additionally, there was a world awaiting American products and ingenuity. Not so today. We aren't competitive in areas we used to dominate. To be sure, we can become more competitive and take strides to correct our course, and we should. But to spend more without correcting our problems is simply a waste of money.

How do we correct our lack of competitiveness? Relaxing regulations would be a great place to start. Regaining a productive attitude from our population is also a must.

How do we get the productive attitude going again? Quit coddling everyone. Demand a return to John Kennedy's famous request: "Ask not what your country can do for you -- ask what you can do for your country." Heck, I'd be satisfied if people would just expect to take care of themselves, and be proud of it.

Last but not least, we need to get our energy policies straightened out. Build the pipeline, drill offshore, encourage nuclear and coal production.

With those policies in place, we can afford -- even encourage -- a stimulus, because then we have something to jump-start. In fact, after the engine turns over, stay out of the way or get run over.

Until then, forget the stimulus. It's simply a waste of money, and delays the inevitable. And when the inevitable gets here, it's a bigger hole to dig out of.

Left-wing ideologues like Paul Krugman posing as economists believe that the reason why the Obama stimulus dumped upon us didn't work is because it wasn't big enough. Krugman points to statistics that show a clear relationship between stimulus spending and corollary increases in economic activity in Europe and the U.S. His statistics also show decreases in economic activity when spending stops. He stops there, arrogantly believing that he pointed out an obvious truth that all should understand and approve of, and the U.S. government should, therefore, "invest" huge sums of borrowed money into the economy. (This is not atypical short-sightedness for Krugman. Remember his piece bloviating about how Wisconsin's unionized teachers were superior to Texas' non-union teachers? Iowahawk destroyed Krugman's case with a little bit of research and basic logic. For those of you who are not familiar with this fun piece of journalism, read it here.)

Of course, Krugman fails to analyze his data properly. Even a slightly intelligent reading of those statistics reveals a distinctly opposite conclusion. Sure, economic activity increases when governments spend money. How could it not increase? A bunch of people have money in their jeans to spend. More importantly, however, are his statistics showing that activity slows when governments stop spending. Of course it does. Interpreting this, however, is where he gets it wrong.

Economists like Krugman believe that government spending in times of a down economy will "jump start" the economy and create enough economic activity to hold us in good stead until the economy recovers on its own. Additionally, they believe that the economy will improve more quickly because of the injection of money by the government, known in current terms as a stimulus.

As mentioned, a key aspect of their statistics is that economic activity decreases when the spending stops -- proof, they claim, that stimulus spending works. They say that because the amount spent wasn't enough, a considerably larger stimulus was necessary to do the job. The "small" amount provided was merely a temporary Band-Aid.

Well, it appears to me that a larger amount would have been just a bigger Band-Aid.

In order for a "jump-start" to work for a car, the other systems of the car have to be working properly. The engine has to run, and the alternator has to recharge the battery, or the car will simply not start the next time you turn the key. Isn't this is a mirror-image of the stimulus? Without a well-functioning economy with good underpinnings, a jump-start will accomplish nothing -- except delay the inevitable, and leave us in a bigger hole. A bigger stimulus would have kept the headlights and radio on longer, but with no engine, the lights go out when the jumping battery is out of juice.

These economists sometimes refer to themselves as Keynesians, which, from what little I know of Mr. Keynes, doesn't do him justice. True, Keynes believed in government spending when the economy is slow, but only when paired with saving and paying down debt when the economy is moving along well. From what I have read, it appears that Mr. Keynes would have shuddered at the magnitude of the current U.S. debt, and he would not have looked favorably on spending at this time. But regardless of what Mr. Keynes would have thought, these times are different from Keynes's world of the 1930s, when our economic machine was blessed with a young, hungry work force that expected nothing from government and gave everything in return. Additionally, there was a world awaiting American products and ingenuity. Not so today. We aren't competitive in areas we used to dominate. To be sure, we can become more competitive and take strides to correct our course, and we should. But to spend more without correcting our problems is simply a waste of money.

How do we correct our lack of competitiveness? Relaxing regulations would be a great place to start. Regaining a productive attitude from our population is also a must.

How do we get the productive attitude going again? Quit coddling everyone. Demand a return to John Kennedy's famous request: "Ask not what your country can do for you -- ask what you can do for your country." Heck, I'd be satisfied if people would just expect to take care of themselves, and be proud of it.

Last but not least, we need to get our energy policies straightened out. Build the pipeline, drill offshore, encourage nuclear and coal production.

With those policies in place, we can afford -- even encourage -- a stimulus, because then we have something to jump-start. In fact, after the engine turns over, stay out of the way or get run over.

Until then, forget the stimulus. It's simply a waste of money, and delays the inevitable. And when the inevitable gets here, it's a bigger hole to dig out of.